Spatial Structure and Productivity in U.S. Metropolitan Areas

Recent concepts as megaregions and polycentric urban regions emphasize that external economies are not confined to a single urban core, but shared among a collection of close-by and linked cities. However, empirical analyses of agglomeration and agglomeration externalities so-far neglects the multicentric spatial organization of agglomeration and the possibility of ‘sharing' or ‘borrowing' of size between cities. This paper takes up this empirical challenge by analyzing how different spatial structures, in particular the monocentricity – polycentricity dimension, affect the economic performance of U.S. metropolitan areas. OLS and 2SLS models explaining labor productivity show that spatial structure matters. Polycentricity is associated with higher labor productivity. This appears to justify suggestions that, compared to relatively monocentric metropolitan areas, agglomeration diseconomies remain relatively limited in the more polycentric metropolitan areas, while agglomeration externalities are indeed to some extent shared among the cities in such an area. However, it was also found that a network of geographically proximate smaller cities cannot provide a substitute for the urbanization externalities of a single large city